Monday, November 24, 2008

Rubin, Under Fire, Defends His Role at CitiDiscussionWSJ 11/29 UPDATEBailout now has a mission statement; you can read it here. A mystery is how even relatively strong firms like Morgan Stanley were battered so quickly. According to The Wall Street Journal, it appears that a confluence of events combined to deliver a huge blow to the blue-chip investment firm. Active buying in the market for credit default swaps, increased short selling by hedge funds and whispers in clients’ ears by rival banks all increased during the time that Morgan Stanley’s stock plummeted to new lows.

Journal says that it’s hard to prove that anything untoward was done, especially in the opaque credit default swaps market. But it quotes memos from Morgan Stanley officials that suggest executives from the company suspected that some traders were doing just that.

Citi and the U.S. government in talks to create a "bad bank" to remove toxic from Citi's balance sheet. WSJ Online article

September 2007, Citigroup CEO, Charles Prince learned for the first time that the bank owned about $43 billion in mortgage-related assets. Asked Citi Tradin head Thomas Maheras whether everything was OK and Maheras told his boss that no big losses were looming. Normally, a big bank would never allow the word of just one executive to carry so much weight. Instead, it would have its risk managers aggressively look over any shoulder and guard against trading or lending excesses.

Citi insiders say the bank’s risk managers never investigated deeply enough. Because of longstanding ties that clouded their judgment, the very people charged with overseeing deal makers eager to increase short-term earnings — and executives’ multimillion-dollar bonuses — failed to rein them in, these insiders say.Citigroup’s woes are emblematic of the haphazard management and rush to riches that enveloped all of Wall Street. Summary and link to Full Article

Wednesday, November 19, 2008

Gary Weiss writes that it's a close question. Joe Nocera makes the point that the SEC, by pursuing this "boorish" billionaire while not giving a damn about, for instance, Overstock restatement of financials, proves that the SEC is sinking into irrelevance.

Tax evasion legal in Switzerland, not in US, this difference that has UBS at odds with regulators and authorities. UBS no longer offers, what it calls Cross-Border Private Banking services for US clients. NY TimesWash Post and all other articles

Thursday, November 6, 2008

“meeting is not about discarding market principles or about moving to a single global market regulator” Summit Nov. 14-15 has White House and President-elect in awkward spot. Leaders of 20 countries to assemble in Washington. Bush administration discouraged suggestions to create a new international market regulator with cross-border authority, The New York Times’s Mark Landler reported.Obama campaign did not respond to inquiries about whether it was invited.

Wednesday, November 5, 2008

WSJ today "Business Braces for Cooler Climate" more on this and Obamanomics below.Compliance Jobs and Bonuses Resilient"It depends on the firm, but we're hearing that bonuses at some bulge bracket firms might be better than initially expected," adds Stuart Rosenthal, vice president of compliance recruiting at Legend Global Search, a New York-based firm that specializes in placing compliance and legal professionals. "The bonuses may be down 25 percent or 30 percent from last year. They're not earth shattering, but in some cases they could be fairly good."At least one sector of finance is experiencing continued demand and relative security in total compensation: compliance. Compliance professionals at all levels will likely be "somewhat insulated."

According to Rosenthal, a typical mid-level compliance officer at a large or medium-sized institution probably makes a salary in the "mid-100s," and can expect a bonus in a good year of about 100 percent of salary. In this market environment, it won't be 100 percent. While compliance professionals at the hardest-hit firms - like Morgan Stanley or Merrill Lynch, or the Lehman employees who were retained by Barclays - don't expect much, Rosenthal says those at other firms may fare reasonably well.

"There are even open positions in compliance," says Rosenthal, noting there are numerous active searches. He sees a number of top firms hiring where they have "special needs." Some firms with open positions are waiting to fill them or being very discriminating, looking at a wide number of candidates in an effort to fill the roles at compensation levels under stated budgets.

WSJ today "Business Braces for Cooler Climate"...GE, with interests in a wide array of sectors, including financial, energy, electronics and health care, could be hurt by government efforts to exert more control over commerce. It also could be helped by more regulations. "If you think we won't get more regulation in places other than financial services, you're nuts," GE CEO Jeffrey Immelt told students at Columbia last month. "We'll get more regulation in health care, energy and other areas."Mr. Immelt says the heightened regulation "could be a catalyst for positive change....It doesn't have to be a negative."

Monday, November 3, 2008

WSJ looks at AIG risk-management operations. Raises questions about the run-up to the financial crisis: Did firms like AIG put too much faith in computer models? Warren Buffett sounding the alarm for years, recently, he told PBS' Charlie Rose: "All I can say is, beware of geeks...bearing formulas." Portfolio.comWSJ via The Australian